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Influx of Law Firms to Texas Roiling Office Market

Legal Footprint in the Lone Star State is Changing Thanks to a Booming Economic Climate

Each week, Glenn Callison, a shareholder at Dallas-based Munsch Hardt Kopf & Harr P.C., is approached by expansion-hungry national law firms honing in on Texas for their next big office.

Callison and his leadership team have yet to accept an offer, but other firms are making some deals.

“This has consistently been a strong market, but Texas, as a whole, seems to be a place all law firms want to be in, and it seems to have picked up in the last few months,” Callison told CoStar News.

The law firms are lured to the Lone Star state because of a booming economic climate, he said, which appeals to national law firms seeking to offset escalating overhead in larger U.S. cities, such as New York or Los Angeles. That industry shake-up has also brought a shuffle of lateral moves by attorneys looking to trade firms.

The movement has created some interesting dynamics in the Dallas office market, Callison said, which includes national law firms subleasing office space from other firms that are losing market share and having to sublet out some space.

This year, New York-based White & Case announced it would open a Houston office, while Sherman & Sterling opened its first Texas office in Austin. In March, Manning & Kass, Ellrod, Ramirez, Trester opened its Dallas office along McKinney Ave. with the help from attorneys that relocated from Los Angeles and San Diego. And, sources say, there seems to be no end to the churn.

Last month, Foley & Lardner LLP and longtime Dallas-based law firm, Gardere Wynne Sewell LP, decided to merge its practices to create a firm with a combined revenue of $830 million. In 2016, Gardere Wynne moved into McKinney & Olive, a high-profile office tower in Uptown, taking 115,000 square feet of office space.

This month, Hunton & Williams and Andrews Kurth Kenyon officially combined law practices, creating a new entity called Hunton Andrews Kurth. The merger pushed several attorneys to change firms, with Andrews Kurth’s real estate group recently joining Greenberg Traurig. Another group of lawyers decided to walk from Andrews Kurth to Jackson Walker, another Texas-based firm.

There’s certainly a demand from law firms for office space in downtown and Uptown Dallas, said Brooke Armstrong, an executive vice president in JLL’s Dallas office, who specializes in the downtown and Uptown office markets.

“There continues to be a lot of shake up with a lot of new firms with M&A activity driving the attorney movement,” Armstrong told CoStar News. “Big firms being acquired are putting their space on the market and a lot of them want to get in to a short-term situation before they make a permanent commitment. It’s a little like musical chairs.”

Law firms looking for space in Dallas-Fort Worth seem focused on the Arts District and Uptown, she said.
Bell Nunnally & Martin LLP, McKool Smith, Winston & Strawn LLP and K&L Gates LLP each have available sublease space on the market.

“A new firm coming to town will turn around and recruit attorneys they are subleasing from, but, at the end of the day, the subleases help alleviate the financial situation for law firms,” Armstrong said.